BMW will pay out a bumper €5.5bn to shareholders after a profits boost from an increased stake in its Chinese joint venture as well as higher prices for its expensive premium cars.
The German carmaker on Thursday proposed a dividend of €8.50 per share compared with the previous year’s €5.80 to allow shareholders to “participate in the success” of its 2022 preliminary results.
The move will mainly benefit siblings Stefan Quandt and Susanne Klatten, BMW heirs who own roughly half of the company and sit on its supervisory board.
BMW revealed last year it had secured permission from Beijing to increase the stake in its joint venture with Chinese partner Brilliance Auto to 75 per cent from 50 per cent for €3.7bn.
China, with its large and rapidly growing middle class, has become the key market for German carmakers, leaving them increasingly exposed to rising geopolitical tensions between the country and the west.
“For German [carmakers], China is around 40 per cent of earnings — so if you are able to gain control of this business, that is of strategic importance,” said Stifel analyst Daniel Schwarz.
“Other companies would like to do the same,” he added, as permission from Beijing is required when western companies increase their stake or take over Chinese joint ventures.
“Only thing now is that they have the highest exposure to China, so if an investor takes a negative view on China, then BMW might look more risky.”
Schwarz added that the dividend was “high, but not a surprise” as it followed BMW’s guidance on a target range of 30-40 per cent of net profit.
The increased stake, alongside higher prices for BMW’s premium cars, spurred a 46.4 per cent jump in earnings last year to €23.5bn. Sales rose 12 per cent to €279bn.
The shortage of chips and other parts last year put a damper on the sales of cars, leaving hundreds of thousands near-completion in factories.
Carmakers responded by prioritising more expensive models, with higher profit margins, leading to a bumper year for the industry.
Earnings before interest and taxes at rival Mercedes-Benz jumped 28 per cent to €20.5bn last year, while Volkswagen last week announced a near 10 per cent increase in pre-tax profit to €22bn.
Schwarz put down a lukewarm reaction from investors because of BMW’s slight consensus miss on its profit margin and strong figures from Mercedes and VW, which meant good news had already been priced in.
BMW’s share price, which has risen by nearly a third in the past year, fell 1 per cent to €99.53 by the market close in Frankfurt on Thursday.
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